Information collected by workers at Israel Chemicals (TASE: ICL: NYSE: ICL) and its subsidiaries, Dead Sea Works, Bromine Compounds, and Rotem Amfert, supports the suspicion that the company managers did not inform the state about significant business measures recently taken by the company, principally its restructuring, although the golden share possessed by the state requires the managers to do so.
Israel Chemicals is due today to answer the Ministry of Finance's urgent letter on the subject sent by the latter's legal advisor, Yoel Briss, at the beginning of week. In the letter, Briss demanded information about a long list of recent actions by Israel Chemicals management, headed by whether the company was transferring business overseas without obtaining the state's consent. Worthy of note is the fact that the inquiry began only after a meeting between the workers committee leaders and the Prime Minister. Up until now, the government ministries and ministers responsible for overseeing Israel Chemicals have refrained from an in-depth evaluation of the workers' arguments. As has already been established in the arbitration between the state and the workers concerning payment of the royalties on products made by Bromine Compounds, however, the state has a free hand to take measures aimed at protecting the public's interests - even if it has neglected its duty up until now.
The cost cutting plan by Israel Chemicals, first published in August 2013, includes the establishment of three service regions: Israel, Missouri in the US, and Amsterdam in the Netherlands. According to Israel Chemicals, the plan will save $50 million in operating costs, with the center in the Netherlands alone employing 300 workers. One of the company's press releases said that the service center in Amsterdam would also coordinate Israel Chemicals' global procurement, and would be managed by Israel Chemicals VP technical and purchasing and former Omer Deputy Mayor Ido Lilian, who would attempt to reduce the cost of procuring the goods and services consumed by the company. At the same time, paralleling the global procurement headquarters, a global sciences apparatus will be established, headed by VP information systems Miri Mishor.
Israel Chemicals group workers have followed these measures with growing concern, after examining in depth the terms of the state's golden share listed in the articles of association of Israel Chemicals and its main subsidiaries, headed by Dead Sea Works. For example, the articles of association state, "Decisions about a change or restructuring in the company shall not be valid without the consent of the holder of the state's special golden share."
Similar clauses prohibit the transfer of the company's business outside of Israel without the consent of the holder of the golden share, i.e. the state. The workers committee is convinced that the new global computer and procurement headquarters are designed to make it possible to close the procurement and computer departments of Israel Chemicals, Dead Sea Works, Bromine Compounds, and Rotem Amfert, in which hundreds of workers are currently employed, some of whom have tenure and some of whom are contract workers.
Israel Chemicals said in response, "Israel Chemicals is acting as required by the provisions of the golden share. Regular management and control of its business will remain in Israel. Israel Chemicals' management, headquarters, and board of directors operate in Israel, and will continue to do so. Israel Chemicals has not transferred overseas assets essential to its existence and development, or to maintaining the company's production capacity. The golden share creates no authority or justification for preventing cost cutting at Bromine Compounds. On the contrary: the efficiency plan will enable an inefficient plant to compete against overseas competitors, especially at a time of crisis and economic slowdown, and will provide it with the economic justification for its continued existence. The cost cutting plan does not constitute restructuring, certainly not in the sense referred to by the golden share.
"Where the establishment of the services center in the Netherlands is concerned, as part of Israel Chemicals' company-wide efficiency measures, the company is founding joint service centers that will provide services in a professional, efficient, and economizing manner to the plants and companies in a given region. In this framework, the company is establishing a service center in the Netherlands that will provide accounting, financial, human resources and administration, information systems, procurement and contracts, and legal advisory services for Israel Chemicals subsidiaries in Europe. The establishment of the global procurement center in the Netherlands will not eliminate the procurement and contracts units in Israel. Israel Chemicals is not moving management of global computer activity outside of Israel."
Published by Globes [online], Israel business news - www.globes-online.com - on March 11, 2015
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